Monthly Mutuals Analysis
Dateline: 12/16/99
Whether it's the unsettled nature of a two tiered market, interest rate increases, or whatever is hard to tell. But mutual funds seem to be playing a game of musical chairs. One month one sector is hot. The next month, a different one. August saw Asian and Tech funds shine. In September gold and precious metals funds were the hot commodity. October saw the momentum switch to sectoral funds - telecoms, science & technology, e-business, financial services and small caps all shared in the bounty. And this month the switch is back to international funds, primarily Asian equities.
Fully 18 of the Top One Month Perfomers as listed at the Vancouver Sun site are international funds, and half of those are Asian. Of the remainder, four are growth funds and three are tech funds.
The top four one month performers are all part of the Cambridge Funds group and all Asian. They are the Cambridge Pacific and Cambridge China Funds and their U.S. dollar denominated counterparts. (I'm never sure whether I should actually count U.S. dollar denominated funds as separate funds because they often have the same holdings as the Canadian dollar funds, but I do so because sometimes there is a significant difference in returns.)
And what returns! The two Cambridge Pacific Funds each returned better than 100% for the month of November. The two China Funds did better than 91%. Simply incredible. But as I wrote in my analysis of Sagit's Cambridge Funds in March, they are a high risk venture. The Pacific Fund, for example, number one performer for November with a 101.75% return, had a compounded annual return of -7.67% for three years and -7.55% for five years!
The Cambridge Pacific Fund is tiny by any standard - with a portfolio of only $671,922.87 to the end of September. At that time, 32% of its portfolio was tied up in one stock - TS Telecom (CDNX - TOM). This one stock jumped from $0.60 a share on Oct. 31 to $2.44 on Nov. 30. That's a 206.67% increase. Even if the other stocks in the portfolio stood still, the fund would have appreciated 65% on that stock alone.
If you think the Pacific Fund was unbalanced at the end of September with a 32% stake in TS Telecom, look at the China Fund! It held many of the same stocks at the end of September, including TS Telecom. Only its weighting of the stock was 40%.
Here's the bad news - TS Telecom closed yesterday at $0.96, wiping out most of last month's gains. The question that arises is, why would anyone invest in the these funds when they could invest in TS Telecom directly?
These are funds for gamblers, not investors. But Cambridge does have a knack of being either very hot or very cold. And it can be contrarian. In February when the general market fell, ten of Sagait's funds made the Top 25 One Month performance list. (See my March report for details.) If you can develop a knack for jumping into and out of Sagit's funds at the right time you can make yourself a fortune. It's not something I would want to try.
Looking quickly at the Three Month chart, we see that the November performance was strong enough to put those four Cambridge funds into the top four Three Month slots as well. Twelve of the Top 25 Three Month funds are international. The remaining thirteen are predominantly high tech and specialty funds.
Our Power Performer Chart this month posts notable gains. The number of PPs jumped to 32 with 13 of them being Super Power Performers. Last month it was 24 and 11. Notable this month is the addition of 7 international funds to our Power Performers plus 2 more that made our Super Power Performers. Last month? None! Zilch! Nada!
Our RRSP Performers also saw an increase with 9 funds, up from 6 for October.
Now let's check out our portfolios!
Comments? Suggestions? Why not post them on our Bulletin Board or email me.
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Mutual Fund Database of Key Links - Relatively new to this site, our database provides targeted links to GLOBEfund, the Fund Library, Portfolio Analytics, Sedar and, of course, the company's homepage for the over fifty mutual fund companies listed.
Recent Fund Articles - The latest fund articles from the Globe & Mail.
Mutual Fund Links - Our own collection of mutual fund links.
Mutual Fund Companies - An extensive collection of links to mutual fund company homepages.
The Fund Counsel - Levi Folk and Richard Webb are two highly respected mutual fund analysts. Their site is definitely worth checking out.
Marco's Power Performers Index Page
Marco's Power Performers to November 30, 1999
Marco's RRSP Performers to November 30, 1999
Note: The author is a financial journalist and not a professional investment advisor. Information contained here should not be construed as investment advice.